Last updated on August 26th, 2022 at 03:05 pm
Domiciliary Account allows individuals, businesses and corporate organisations to receive and make payments in foreign currencies. But the Central Bank of Nigeria (CBN) frowns at using such accounts for illicit activities.
As such the apex bank issued a circular on the domiciliary account and other guidelines of the apex bank regarding the operation of foreign exchange dom accounts in Nigeria.
There were even speculations that the CBN might soon be converting foreign exchange currencies in such accounts to naira, analysis of this can be found at: https://infomediang.com/cbn-have-powers-to-convert-foreign-currency-in-domiciliary-accounts-to-naira
As we all know, IMTOs have a huge influence on the foreign currency exchange rate in Nigeria regarding the CBN directives.
To online business owners, content creators, and Adsense partners, Domiciliary Account is one of the keys to the success of their activities online.
And the reason isn’t far-fetched: it helps to facilitate their international transactions like deposits (payments from partners abroad).
In your country, the main purpose of this account isn’t intended to save money, but rather for the purpose of transacting business, to account holder carry out their business transactions using foreign currencies like US dollars, British Pounds, Canadian Dollars etc.
Merits of Domiciliary Account To Business Owners
- It enables you to transact in foreign currencies, specifically USD, Pounds, Euro
- It enables you to receive direct foreign currencies from your customers abroad
- It enables you to make payments for international transactions, particularly for importers of goods in Nigeria
- In Nigeria, Domiciliary Account gives you more control over unstable Naira
- With your Dom account, you can stand as a referee for another person
8 Factors to Consider Before Setting Up A Domiciliary Account in Nigeria
You can operate a dom account with all the banks domiciled in Nigeria, but there are certain factors you need to consider before setting up a Dom account, these include:
- Customer Service
- Monthly charges
- Fees per transaction
- Transaction limit
- Intuitive banking app
- Transfer from your account to another Dom account (subject to CBN directive)
How accessible does a bank make your account to you? Do you have to personally know a worker in the bank to successfully operate your account?
Does the bank hoard foreign currency as against CBN directive? Does the bank always complain of insufficient foreign currencies?
You need to ask a friend about these questions to be sure of the best one for your business.
The security mechanism of a bank is one of the most crucial factors to consider before setting up a dom account in Nigeria.
Some Nigerian banks send timely security tips to their banks for customers to stay up to date about the latest online scammers use, this would help you to protect your account from intruders.
You must also take personal security seriously, most especially if most of your transactions are done on the banking app.
How fast and responsive is the bank? If you have to urgently contact your bank for assistance, are they always there for you?
GT Bank used to the best Nigerian banks in terms of customer friendliness, but today it seems the bank is overwhelmed by the number of customers.
Have heard about maintenance charges before? Ask those who bank with Access and Wema Bank.
Or if you use a debit or credit card on your domiciliary account to withdraw from an ATM machine, how much was charged?
Fees per transaction
How much would you be charged to transfer say $600USD to another dom account?
From experience so far, GT Bank is the best open domiciliary account within Nigeria in terms of fees charged per transaction, $3 transaction fee on $600 on GTB sounds cool to me compared to others I’ve used.
Charges may vary, but the charges depend on your bank. If you have any other one that’s lower than that, kindly let’s know.
Operating a domiciliary account isn’t a pass to carry out questionable transactions online.
In fact, Nigeria’s apex bank monitors every inflow into every account in Nigeria, most especially when it’s foreign currencies and any commercial bank is mandated to report questionable transactions to the CBN.
However, does the bank operate a flexible policy in accordance with CBN? Or does it operate for its own interest by jeopardizing the customer’s interests?
The transaction limit on dom account in Nigeria as we write is $10, 000 US dollars or its equivalent.
Intuitive banking app
We all talk about Financial Technology, banking app is one of the tools that complement that drive.
If a bank doesn’t give you the freedom to carry out every transaction on the app, then something is wrong.
The aggregate views of those who spoke to us plus the seven factors listed above, there are five best in Nigeria with a domiciliary account, they are:
- Standard Chartered Bank
- GT Bank
- First City Monument Bank
- Zenith Bank
- Access Bank
Requirements for setting up Domiciliary Account
As a starter, you might want to ask: How do I open a domiciliary account in Nigeria
The conditions for opening a dom account in Nigeria vary from bank to bank. For instance, Zenith Bank requests the following from you to open such an account:
- A letter stating the purpose of the account
- An initial deposit of at least $100USD (Access bank, Zenith Bank)
At GT Bank, you don’t need an initial deposit of $100 USD. All you need are:
- Two referees
- Means of ID
- Utility bill
Not only that, GT Bank doesn’t restrict you to one type of currency per account, you get access to three currencies: US Dollar, British Pounds, and Euro.
This means you can receive payments or transactions in USD, Pounds, and Pounds, making it possible for you as a business owner to widen and expand your business horizon.
To open a Dom account with Standard Chartered Bank, all you need to do is download SC App on Google Play store, set up a savings account, follow the security recommendations, upgrade your account to current and select the foreign currency you want to operate in, all within the app. Boom your foreign account is ready!
For requirements to operate a domiciliary account in Nigeria, kindly contact your bank for details, it varies as we earlier said.
When can I start using my dom account?
Once you receive your account details from your bank, you can start using it to receive funds from your customers abroad or make legitimate transactions.
For instance, to receive your monthly payment from Google Adsense, you will have to fill in space for an account within your dashboard. Google uses wire transfer, this is popular among bloggers.
Or send your account details to a partner abroad, when you receive alert, you can then go to your bank to withdraw on the counter.
You can locate a reliable Bureau De Change operator around and exchange your dollars for Naira.
In some Nigerian banks, your foreign currency is automatically credited into your Naira account, meaning you can only receive the Naira equivalent of the foreign
Ability To Transfer From Your Account To Another Domiciliary Account
Ordinarily, you should be able to make a transfer from one dom account to another, but this is subject to the regulations of the CBN.
Before now, you could easily wire USD to another account to receive payment in Naira, but that seems to have changed.
For instance, GTB dom account holders can only make transfers to another account domiciled with GTB.
How to exchange foreign currency in your dom account to Naira
So you’ve received some dollars or pounds in your account and thinking on how to convert them to naira for local use?
Walk into your bank, fill withdrawal form and contact your bureau de change agent the exchange. You must first compare the exchange rate in the market and choose the best, but be careful!
Types of domiciliary account in Nigeria
- Personal use (online buyers, bloggers)
- For business (importers and exporters)
- Forex trading (licensed BDC)
How will Domiciliary accounts be operated In Nigeria?
According to a circular signed on Monday, November 30, 2020, by the Director for Trade & Exchange Department at the apex bank, Dr O.S. Nnajion, the CBN clarifies how domiciliary accounts will be operated in Nigeria in the face of Naira devaluation.
This is how dom accounts will be used:
1) Domiciliary accounts will be used to deposit export proceeds (inflow from exports of goods and services from Nigeria)
2) They can only be used for business operations.
3) Extra funds remaining in the domiciliary accounts will be sold in the Investors and Exporters (I&E) Window.
4) Exporters can not sell their foreign proceeds in the black market.
5) In the case of electronic/wire transfer, account holders will be allowed to use the funds for eligible transactions.
6) If you received a foreign transfer into your account, you can use it to make payment for transactions or transfers to anyone at any time.
7) A limit of $10,000 applies when you want to utilize foreign currency cash deposits. This means you can deposit Cashier’s U$D Check into your domiciliary account.
Can money be deposited into my Nigerian domiciliary account from Russia?
Yes, you can receive payment from any country provided it’s legitimate and doesn’t exceed the limit.
Note: The regulation on dom account put in place by Nigeria’s apex bank is one of the ways to increase the value of Nigerian Naira against other currencies in the world.